News
In a summit today, the CEOs of both Nokia and Ericsson called for greater investments into network technology to support European innovation
In a rare display of unity, today the CEOs of telecoms tech rivals Nokia and Ericsson both took to the stage at the New Industrial Ambition for Europe summit in Brussels, arguing that Europe needed major reform to ensure competitiveness on the global stage.
The event saw Pekka Lundmark, President and CEO of Nokia, and Börje Ekholm, President and CEO of Ericsson, argue that European authorities need to make sweeping changes to regulations and align more closely on strategy to create a more digital single market.
“European competitiveness already has one foot in the morgue,” said Lundmark. “Our real GDP is 30% less than the U.S.’s, the EU’s share of the Fortune Global 500 is still falling and our digital future looks less certain than ever. The good news is that we can still turn this tanker around. Europe must create an environment in which businesses want to invest, especially on technologies such as AI, cloud and advanced connectivity. This cannot be a decade-long endeavour. Europe must act right now on issues like the 5G Toolbox and telco mergers. If Europe gets this right, it’s a massive opportunity. Draghi and Letta already provided the framework. So, let’s act.”
The crux of the group’s message was clear: Europe needs to increase its innovation and R&D spend to be more competitive – something the continent’s technology sector cannot do effectively with an oppressive regulatory regime.
The group called for a rethink and increase in scale of public spending around European “disruptive innovation”, a softer regulatory approach to market consolidation, and a greater focus on developing the digital infrastructure (i.e., networks) needed to support the tech sector.
The summit built upon the contents of the Draghi economic report published in September last year. The report, penned by ex-prime minister of Italy and previous president of the European Central Bank Mario Draghi, paints a picture of Europe severely lagging behind its global rival in terms of technology and economic growth.
A major problem, the report points out, is the sheer scale of the US tech giants, whose R&D budgets dwarf their Europea would-be rivals. According to a report from the McKinsey Global Institute, European companies trail in R&D and capital formation by an €450 billion in tech alone, with US companies investing around 60% more than their European counterparts in R&D.
It is worth noting here that Europe has not created a company with a market capitalisation over €100 billion in the past fifty years. This can be partially explained by the fact that successful European tech companies are typically acquired or otherwise relocated to the US, where they can scale more rapidly. According to the report, between 2008 and 2021, around 30% of the European startup unicorns (i.e., start-ups that went on the be valued at over $1 billion), relocated their headquarters abroad.
In this sense, both the Draghi and the CEOs of Nokia and Ericsson all agree that Europe must do more to make itself a welcoming – and permanent – home for tech innovation.
“Companies like Ericsson already invest disproportionally more in R&D in Europe. If other regions continue to race ahead this model cannot survive,” said Ekholm. “Those regions are embracing opportunity through investment, policy, and regulatory support. Europe is not. Yet the solution is well known. The EU must implement the Draghi and Letta Report recommendations to enable the technology sector to play our part in delivering future European prosperity.”
The summit was notably attended by a number of high-profile European stakeholders, including Henna Virkkunen, the European Commission’s Executive Vice President for Tech Sovereignty; Dariusz Standerski, Deputy Minister of Digital Affairs for Poland; and former Italian Prime Minister, Enrico Letta.
Virkkunen was appointed Executive Vice-President for Tech Sovereignty, Security and Democracy in December last year as part of the cohort of European Commissioners.
Also in the news:
Adani Group’s ‘foray into industrial 5G’ is a complete failure
Sparkle signs deal to recycle 22,000km of submarine cable
Nokia bags deal to connect new offshore wind farms